Responding to a report on the new tax credits system published by the Public Accounts Committee today, the Chief Executive of the Child Poverty Action Group (CPAG) Kate Green said:

“Tax credits have helped millions of low-income families and are a vital tool in the fight against child poverty, but problems with the administration mean they have not always worked as successfully as they should have done.

“Many families have struggled when money has been clawed back by the Revenue, but a package of reforms announced last year should radically reduce the scope for overpayments and limit the impact of recovery on the poorest families. The Revenue must ensure these reforms work successfully so that public confidence in the tax credits system is fully restored.

“CPAG would like to see some further reforms including a statutory right of appeal against overpayment decisions and the option of face-to-face advice for claimants who need it, perhaps by basing Revenue staff in local Jobcentre Plus offices.

“As we move forward from the problems of the past CPAG urges politicians from all parties to commit to further investment in tax credits as a way of lifting children out of poverty and helping parents back to work.”

Responding to the publication of a Public Accounts Committee report, Child Poverty Action Group’s chief executive Kate Green said

“The Committee draws attention to historic tax credit debt. These overpayments arose in the first two years where administration was poor. Much of the debt is unlikely to be recovered but continuing to chase it causes families worry and hardship. HM Revenue and Customs should draw a line under implementation problems by writing off outstanding debt from 2003-05.

“The Committee highlights the many families with children who do not receive tax credits to which they are entitled. CPAG strongly supports the recommendation that HM Revenue and Customs should have take up targets for tax credits and action plans to increase take up.

"CPAG has been supportive of the HM Revenue and Customs tax credit transformation programme, which aims to improve clarity and customer service, but this report shows how much further this programme needs to go. In particular CPAG urges much greater provision of face to face advice by HM Revenue and Customs to the diversity of claimants needs. It is also vital that HM Revenue and Customs carefully monitors the impact of the recession on the delivery and improves systems to support families at this difficult time”.

CPAG is the leading charity campaigning for the abolition of child poverty in the UK and for a better deal for low-income families and children.

CPAG is one of over 130 member organisations of the Campaign to End Child Poverty, campaigning for public and political commitment to ensure the goals of halving child poverty by 2010 and ending child poverty by 2020 are met.

Minor point: HMRC does not have the right to decide which debts to ignore or recover. Policy comes from government. If HMRC were given the power to decide who "deserves" to keep the money they were incorrectly paid, there would rightly be uproar.

HMRC run regular publicity campaigns to encourage people to claim whatever benefits or credits they are entitled to. They also have a duty to recover money that was incorrectly paid.

You have a point, LittleLady, that recovery policy comes from government, but when that government gives HMRC discretion within that policy, it is giving HMRC the right to make its own judgments and weigh matters up on individual cases. Thus, there should be a number of safeguards in place to ensure that there isn’t just a ruthless application of the rules but some leeway for discretion to be exercised, benefit of the doubt given, etc.

Evidence that HMRC’s use of discretion was minimalistic and insufficient must surely come from the fairly changes to their COP26? Previously, as you know, a write-off was only granted if HMRC had made errors, the claimant had thought their incorrect payment was correct, and HMRC deemed that claimant’s belief that all was well to have been “reasonable”. As I recall, the government left HMRC to decide what was “reasonable” and what was not. HMRC barely accepted anyone’s belief as reasonable, and it took much lobbying by and criticism from TCC, LITRG, CAB, the Ombudsman and others for the “reasonableness” test to be scrapped.

Sadly, HMRC still is not employing its discretion as it should be used. The actions and the rhetoric – whether from HMRC or this government – simply don’t match. So whilst HMRC is spending more taxpayers’ money – with the government’s blessing – on trying to encourage take-up of Russian Roulette tax credits, the public are shying away in droves because they know all about HMRC’s “duty to recover money that was incorrectly paid”. Trouble is, HMRC may have this “duty to recover”, but it doesn’t seem to have any “duty to correctly pay”. So all the sanctions are on the claimant’s side. HMRC simply has no accountability. And ultimate power with zero accountability is a dangerous mix.